National Securities Depository Ltd (NSDL) has onboarded the majority of new brokers entering the market in recent quarters, surpassing its competitor in this segment, according to the company’s managing director and chief executive Vijay Chandok.
“These newly onboarded brokers are primarily new-age players who are currently small but are expected to grow significantly in size and scale,” Chandok told Mint, speaking after NSDL’s press conference in Mumbai announcing the price band for its initial public offering (IPO).
Bringing in new brokers could be a key move for NSDL, especially as rival Central Depository Services Ltd (CDSL) currently leads in terms of new demat account openings.
As of FY25, CDSL had 37.38 million new investor accounts, while NSDL had added 3.68 million.
The next growth driver and a natural opportunity in the market for NSDL is by providing better settlement pricing, said Chandok. NSDL has removed the settlement fees per debit instruction for the first 36 months from the date of opening a new demat account for individuals below the age of 24.
“The YUVA plan is meant for the young investors, because we see this as a growing market, and to facilitate this opportunity, we have brought the pricing of settlement to zero,” Chandok said.
Settlement fees refer to the charges paid to the depository for transferring the ownership of shares between buyers and sellers.
The transaction revenue per account for NSDL has fallen from ₹72 in FY21 to ₹63 in FY23, according to NSDL’s draft red herring prospectus (DRHP). “You will find younger investors coming as compared to the senior guys who have participated earlier in the market, they tend to have lower per capita capability, which brings down the average.”
This number is naturally expected to fall further as more young investors come in, he said. But, as more investors come, there are more opportunities to generate revenue, he said.
Same-day settlement
On the slow adoption of same-day trade settlement (T+0), Chandok said that was for brokers to decide.
“We are very supportive of all the regulatory changes as it is in the interest of market risk and a safer environment. In that spirit, we would have already provided this service to our brokers, and now it is really for the brokers to follow and then implement it,” Chandok said.
However, Chandok said that the market participants will have to wait for it to play out as “we have seen things moving from T+2 to T+1”.
Chandok said the agenda for further investments in technology will be laid out soon. “All of that is self-sustained in terms of financing as the company is cash-rich,” Chandok added.
Investments in technology started during Covid 19, when companies had to meet the regulatory requirement of conducting AGMs. NSDL launched e-AGM, which revolutionized or changed the way people conduct and attend AGMs, Chandok said. NSDL also launched a product for debt capital markets — a DLT-based platform for covenant monitoring, he added.
NSDL has the highest market share by value of securities in demat form at ₹464 trillion in FY25 compared with CDSL’s ₹71 trillion.
IPO price band
NSDL has set its price band ₹760-800 per share for its IPO. At the upper end, the company is expected to raise ₹4,000 crore.
The issue an offer for sale (OFS) of 50.1 million shares. Among the sellers offloading their stakes would be IDBI, State Bank of India, National Stock Exchange, Union Bank of India, HDFC Bank, and Specified Undertaking of the Unit Trustof India.
The IPO will open for subscription on 30 July and close on 1 August.
